After the recent decision by the Centre to demonetize Rs500 and Rs1000 banknotes, luxury brands are most likely to be hit since customers may postpone spending for sometime. Experts believe the move will affect luxury retailers who are already under pressure from measures like customers having to show their PAN cards for transactions in cash of more than Rs50,000 and any transactions more than Rs 2 lakh.
According to Dhanraj Bhagat, partner at consulting firm Grant Thornton India LLP, there is likely to be an impact on luxury retail in the short term, mainly because most luxury sales in the country constitute a large amount of cash, and consumers will avoid large spends for the time being, the Live Mint quoted him as saying. Agreeing with him, Dinaz Madhukar, senior vice president at DLF Luxury Retail said that even though there will impact, it is too early to quantify the quantum. It is needed to be seen how things develop in coming days, he added.
Pranav Saboo, co-founder of Ethos Watch Studios felt that such steps have a short term effect and do not impact the underlying demand for luxury products. He added that when AN-card rule came out earlier this year, here was a short-term hit for a couple of months, but in this case, there will be an impact till 31 December.